Trump’s Tariff Promise

Via Reuters: Trump vows new Canada, Mexico, China tariffs that threaten global trade.

Trump, who takes office on Jan. 20, 2025, said he would impose a 25% tariff on Canada and Mexico until they clamp down on drugs, particularly fentanyl, and migrants crossing the border, in a move that would appear to violate a free-trade deal.

Trump also outlined “an additional 10% tariff, above any additional tariffs” on China, in some of his most specific comments on how he will implement his economic agenda since winning the Nov. 5 election on promises to “put America first”.

This is, of course, a terrible idea.

More than 83% of exports from Mexico went to the U.S. in 2023 and 75% of Canadian exports go to the country.

Trump’s threatened new tariff would appear to violate the terms of the U.S.-Mexico-Canada Agreement on trade. The deal which Trump signed into law took effect in 2020, and continued the largely duty-free trade between the three countries.

[…]

Economists say that Trump’s overall tariff plans, likely his most consequential economic policy, would push U.S. import duty rates back up to 1930s-era levels, stoke inflation, collapse U.S.-China trade, draw retaliation and drastically reorder supply chains.

They say tariffs are paid by the companies that import the products subject to the duties, and they either pass on the costs to consumers or accept lower profits.

While I suppose we can all continue to hope that he isn’t serious or that some other force (the courts, the bureaucracy, incompetent, etc.) will stand in his way, if carried out this will do substantial harm to the global and domestic economies. One of the grandest ironies of them all that this move will make prices on a host of goods go up substantially.

There is also the utter illogic of connecting tariffs, fentanyl, and illegal immigration. From Trump’s post on Truth Social:

This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!

That is, of course, not how any of this works.

Hampering trade with Mexico and Canada will not stop the illegal drug trade. And, no, neither country has the “power to easily solve” these complex issues.

This is all foolishness, but that’s where we are.

There is a lot going on with Trump and recent GOP politics, but it is rather remarkable to watch the party of markets and free trade become the party of tariffs.

And I just have to wonder how anyone in the Trump coalition who thinks of themselves as a policy analyst, or intellectual, or works at a “think tank” actually thinks when they read their party’s leader arguing that tariffs are the solution to drugs and immigration.

It is all so absurd that I am still processing it.